Draconian lockdown measures have been put in place in China wherein people are restricted from even buying daily essentials. This step was taken to curb the outbreak of Covid-19. This also means that the demand for global oil will be less, according to the International Energy Agency. Since the oil supply from Russia is decreasing with each passing day.
According to the International Energy Agency monthly report, Russia’s output will fall by 1.5m barrels per day (BPD) in April with the decline accelerating to 3m bpd starting from May. This would be mainly because buyers will willingly boycott supplies controlled by the Kremlin or due to the sanctions which have been levied upon Russia.
The projection further indicates that as much as 3% of global supply could be lost by spring, given Russia’s current position as the world’s second-largest oil producer.
Currently, China is under a strict lockdown forcing as many as 26 million people in Shanghai to be inside their homes. Organization for Economic Co-operation and Development (OECD) — an international organization of 38 countries that works to build better policies for better lives has also lowered its global oil demand forecast by 260,000 bpd as compared with last month’s prediction and now expects the world to need an average of 99.4m bpd in 2022.
This figure is still an increase of 1.9m bpd in 2021 because of the global economic rebound from that year. This was highly affected by the Covid restrictions around the world.